Supply chain | Supply Chain Management, Commerce

Converting standard cost item to average cost item for product substitutions

(0) Share

Report

Posted on by Community member

Hello,

We have some items in our company that use standard cost (manufactured items) and others that use average cost (purchased items). Sometimes we need to use a manufactured (STD) item as a substitution for a purchased item (AVG) to fulfill customer orders.

Since the part that it is becoming is an average cost, purchased part, we cannot put a production order on to capture the labour and convert the manufactured, standard part into the purchased part.

Is there a way to convert these parts and capture the costs?

Thank you!

I have the same question (0)

All responses (5)

Answers (0)

Suggested answer

BillurSamdancioglu 20,521 Most Valuable Professional on at

Like (0)

Report
Copy link

Link copied!

Hi,

Have you considered to use batch or serial number?

Was this reply helpful? Yes No
André Arnaud de Cal... 303,383 Super User 2026 Season 1 on at

Like (0)

Report
Copy link

Link copied!

Hi,

Can you explain your envisioned process for using another product as a substitution in case you can't deliver the original ordered item? Are you changing the order or do you want to post an inventory journal to subtract the manufactured items and increase the on-hand for the purchased item?

Was this reply helpful? Yes No
Community member 6 on at

Like (0)

Report
Copy link

Link copied!

Hi Andre,

We are currently subtracting the manufactured items from inventory and adding to the purchased item. The concern with that is that the costs between the two are different, so finance is seeing a variance, and that method does not capture the labour involved in repackaging the manufactured item to use as the purchased item.

Ideally we would love to have a production order that could be scheduled, capture the labour, consume the manufactured item as a BOM component, and report as finished to increase the inventory of the purchased item. That's where we get stuck because I don't see a way to add a BOM to a purchased item, so we are looking for other methods that could capture those costs and make a clear trail for finance.

Thanks!

Was this reply helpful? Yes No
Guy Terry 28,944 Moderator on at

Like (0)

Report
Copy link

Link copied!

You could create a new BOM item, which is average costed. This being the item you sell when the purchased item is not available.

You could create a production order to produce the new BOM item, which will capture cost of repackaging the standard cost item, and also consume the standard cost item (and could consume any packaging items as appropriate).

Was this reply helpful? Yes No
Suggested answer

Nigel J Cox 40 on at

Like (0)

Report
Copy link

Link copied!

I hope I am understanding your issue correctly! Have you considered making the Item a BOM item (and providing a BOM and Routing) BUT selecting Purchased on the default order settings? This would plan for Purchasing in MPS but permit you to manufacture, I believe. I haven't tested whether the system will let you update a Released product to type BOM, but I suspect it will . . .

Was this reply helpful? Yes No